Based on a long-term analysis of historical data, the average positive and negative daily returns are approximately 0.45% and -0.44% , respectively. Yesterday´s return was -0.02% . Our scoring is currently negative (-2 ) for the month-on-month change and -2 for price indexation. This means that we are in the initial declining phase of the cycle after falling from the level of 0.8 . Both scorings range from -3 up to 3 . The estimated cycles development based on our analytical systems is shown in the following chart.
Different moving averages (MAs) help us better identify trends across multiple time frames. We use 3 basic MAs to find out which sentiment dominates each horizon. The purple line represents the monthly , the green line the 6 months and the yellow line the annual moving average. According to all MAs, the USD/JPY is in bullish sentiment because it is above them. In the event of decline, the monthly MA could be an important support for the exchange rate.
Since the beginning of 2021, there have been more upward trends, where we have also recorded a medium-term maximum of 6 consecutive days. Downward trends did not exceed more than 3 days in the same period. We could use the average ATR (Average True Range) obtained from daily data (0.69% ) to estimate Stop Loss orders for our positions. The current value is 0.43% . Approximately 90% confidence interval (return between -1% and 1% ) is shown in the histogram below by a red rectangle. We could use the last decile of low to high returns (1.50% ) to estimate Profit Targets, as shown in the second chart below.
Basic technical analysis still supports bullish sentiment, as the exchange rate creates higher lows and higher high. However, we can clearly see the stabilization phase (ranging from about 108.50 to 109.20 ) in recent weeks. The USD/JPY is currently also close to the demand zone (green rectangle) with a strong upper part, where the Fibonacci retracement level of 61.80% is. In addition, there is also a psychological level of 108.00 . This could be an important level of support for short-term bulls. Volumes are slowing down, which could indicate an accumulation of trade energy for the next movement. The psychological level at 110.00 (the Fibonacci retracement is also close to it) could be potential resistance to the exchange rate in case of growth.